The ghost of IR35

“Professional advisers and the main industry association have collectively failed the HGV agency driver…..”

Professional advisers and the main industry association have collectively failed the HGV agency driver by not defending them stoutly enough in past IR35 claims by HMRC. By embracing a weak and ineffectual taxation regime, the so called experts are currently encouraging HMRC’s attempts to compare HGV Driver’s with IT, media and public sector workers. Throwing the HGV Agency driver to the wolves is not the response that is required from the RHA, who should be actively promoting this valuable resource.
IR35 is underpinned by a huge number of tax tribunal cases and case law precedents, because it is a fundamentally flawed piece of legislation. It tries to lasso contractors from all sorts of professional backgrounds and apply a standard set of ambiguous rules, tests and benchmarks.
I personally believe that drivers are fundamentally outside of IR35 and SDC, as they are merely obligated to drive their lorries and the delivery of their service can only be performed by themselves (unless the boss of the hirer or agency is sat beside them helping the Driver to change gear or telling them to turn left at the next set of traffic lights!!). Nearly all drivers can pick their routes, the timing of gear changes and even when they stop for their mandatory rest periods.
Many driver’s choose to work for Agencies as employees of owner-managed small limited companies, on effectively, not much more than the new Living wage. They are often contractors by choice, embracing the flexibility that self-employment brings over any perceived taxation advantages.
The HGV driver has professional status because he or she can only work in this highly regulated industry courtesy of investing in passing the DVSA class 1 or Class 2 test, holding a Certificate of Competence, which requires a wide knowledge of UK tacho laws, EU directives, loading and fastening techniques, a working mechanical knowledge and not to mention actually driving safely a highly expensive, technical piece of plant and machinery.
I understand that a large contract, with some 500 agency workers, performing driving services, was found to be inside the IR35 rules by HMRC, because they had “to call in the office (up to 15 times a day)” and other failures such as staying under the same contract for over two years, and so therefore found to be under the direction and supervision of the hirer, in a “disguised employment” situation.

“With the modern tracking technology, which has been available since before the onset of IR35 in 2000, how does it make any difference if a driver calls in the office one or a hundred times, as the operations manager knows where the asset is, often to the nearest metre.”

Often, such methods of communication are a throw-back to the old days of trucking with the traditional game of cat and mouse between the transport manager and driver.

The HGV driver’s similarity with the aforementioned Professional worker’s ends with the fact that they are contractors, often sub-contractors to sub-contractors. As IR35 was originally set up to counter the “leave on Friday and start on a Monday” contractor, it is hard to see why this should worry the HGV lorry driver at all.

After all, all DriverPlus driver’s are HMRC compliant – as they all operate as a business in your own rights, pay the correct amount of tax on time,  however that said the HMRC’s continued interest in IR35 is both worrying and challenging, and should be a cause of concern for the driver, but if managed properly should not be cause if blind panic. Over-complacency should be guarded against, as all HGV drivers need to be on the ball – by querying work which could fall inside IR35 or if they accept a contract where there is a heavy amount of supervision and direction from the hirer, be prepared to ask for a higher rate of pay and consequently pay a higher amount of tax on this contract.

However, over the coming months we at DriverPlus will be re-assessing each driver’s modus operandi, in anticipation of any future rule changes from HMRC. Watch this space.

Neil Hooton

July 2016

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2 thoughts on “The ghost of IR35”

  1. Brilliant piece. Only one bit missing is the extra pound we get doesn’t cover what we have to pay out anymore le, holiday pay , ni for employer etc. Customers won’t pay anymore because they have endless supply of cheap eastern European drivers, who can cheat the ir35 tax rules, so British drivers are stuffed.

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    1. I think that the agencies are sat pretty at the moment. They need to engage and share their margin a little bit more equitably with the drivers. I agree the extra £1 hardly covers the loss of employment rights. However, we have several Eastern European drivers on our books, all of which are forced to pay over all due taxes. I guess it is down to the quality of their accountant and advice (if any) they receive.

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